The US Dollar is attempting to build higher against the Japanese Yen having found support at the bottom of a rising channel support set from early February. Initial resistance is at 102.84, the 23.6% Fibonacci expansion, with a break above this boundary on a daily closing basis targeting the 38.2% level at 104.14. Alternatively, reversing below the channel bottom (now at 101.65) exposes the February 4 low at 100.75.

While a long position can be justified at current levels from a risk/reward reward perspective, we will tactically opt to stand aside. We see the possibility of emerging Yen strength in the near term as fading doubts about the continuity of the Fed’s QE “tapering” effort spark risk aversion, driving haven JPY demand.

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